Cisco Cuts 1,100 Jobs Following Weaker Than Expected Revenue Guidance

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Cisco revealed plans to cut 1,100 jobs as part of an expanded restructuring plan this afternoon as the networking giant reported that its revenue for the current quarter would be about 6 percent lower than previously anticipated.

The San Jose, Calif.-based networking giant said those cuts would come in addition to last year's 5,500 layoffs announced in August.

Cisco gave a weaker-than-expected guidance for its current fiscal fourth quarter, predicting revenues to decline between four to six percent. CEO Chuck Robbins said the change was due to a sales decline in its service provider and public sector businesses.

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"The public sector business, particularly in the United States federal business … is a pretty significant stall right now with the lack of budget visibility," said Robbins, during Cisco's third quarter earnings call on Wednesday.

Cisco's service provider business for dropped 10 percent year over year during its third fiscal quarter, which ended April 29, while public sector sales declined 4 percent.  

"We have been facing headwinds all quarter long with service provider and emerging markets, we saw them get worse this quarter. I'm expecting that to continue," said Cisco CFO Kelly Kramer. "Then we saw some new kind of macro issues in areas like public sector and the U.S. federal space."

However, Robbins said recurring revenue represented 31 percent of Cisco's total revenue, up from 29 percent one year ago, while software and subscriptions revenues grew 57 percent.

"When we think about the strategy that we're deploying, the 57 percent growth in the software and subscription business – if you go back eight quarters ago we had $2 billion on our balance sheet relative to software and subscription," said Robbins. "Now we've more than doubled that to $4.4 billion, and the growth there is accelerating. We're very pleased with that transition."

After its earnings report had been released, Cisco stock fell more than 8 percent in after-hours trading to $31.08 per share.

Robbins said he's "pleased with the progress" Cisco made during the quarter. "This transition will take time, but we are remaking this company to succeed in a dramatically changing marketplace," he said.

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